Dire financial situation urges help from CoGTA

This urgent request will be made to the MEC for cooperative governance and traditional affairs (Cogta), Busisiwe Shiba, by the DA in Mpumalanga.
According to the DA the financial liabilities are currently a huge burden to creditors and residents.
Over the past couple of years, both these municipalities have been rocked by violent service delivery protests over the state of the roads, lacking water infrastructure, electricity cut-offs, and no employment opportunities (Steelburger/ Lydenburg News Thursday March 11).

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For years the Auditor-General (AG) has been noting concerns over the material uncertainty of the City of Mbombela as its current liabilities exceed its current assets.
However, despite being a normal occurrence and a turnaround strategy implemented in 2017, the financial affairs of this municipality remained the same due to a lack of implementation and incompetence, thus leading to the current liabilities exceeding the current assets in the 2019/20 financial year by nearly R1,5 billion.

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This means the municipality is bankrupt. In light of this supposed liquidity, it is understandable how over the space of four years the Eskom debt in this municipality increased more than three times, from R152 million in October 2017 to R576 502 000 at the end of April 2021. In Thaba Chweu Local Municipality, the Auditor-General noted that the municipality incurred a nett loss of R165 million during the 2019/20 financial year.

Despite a provincial intervention being in place and the implementation of a financial recovery plan in 2019, the municipality’s current liabilities increased by 24%.
The DA found the financial positions of both these municipalities worrisome as it is this that inevitably leads to them failing to provide services to ratepayers and their residents, hence the usual occurrence of service delivery protests. Their financial instability and failure to service their debts to creditors reflect a broken system, one in which no matter how much money may be distributed to them, service delivery outputs will always be affected.

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In July last year, it was reported that the City of Mbombela failed to use all of its conditional grants for infrastructure development and maintenance given by the national government, thus resulting in R101,8 million being returned to Treasury.
Given the above, the DA will write to Shiba, asking her to assist these municipalities with a strategy that will help them deal with their financial situations – even if it means placing them under curatorship.

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